Japanese Management

As we know, Japans economy, situation, and condition was totally destroyed during the World War II. But
surpassingly, Japan now become one of the powerful countries in the world especially in the economic in
only took for less than fifty years. This the reason why I choose this topic. In this Paper we will look at how
are the Japanese managing their company that is one of the key of their success in the business. Also I will
comparing the Japanese way with what the western country way of how to manage. The possibility of us
in putting in the Japanese Theory in our (western) world are also discussed in this paper.

As we know, Japan had a very amazing growth in economy in the 70s and 80s. We remembered
that before Japan had this growth, Japans economy was really destroyed by the World War Two. Japanese
bounced back from disaster to one of the most powerful countries. Two reasons Japanese firm became so
successful is how h well managed their firms are. They blend their own culture with others in operating
their firms, as a result, they come out with their own unique way of management. They are also successful
in the way they develop their human resources.

The Japanese business and management system is strongly rooted in Japanese culture and
tradition. Japanese have a very unique relationship between institutions and state , between individuals and
the state, and between individuals and individuals. These relationships are linked to culture and traditional
values. The Japanese is a plural homogeneous society. They have varieties of people but instead of
individualism, they tend to form a group and there are no competition between group. They have very good
loyalty in a group. Lee and schwendian wrote in their book,” When a Japanese man asked his occupation,
he will usually answer that he is a Sony or Hitachi man, not that he is an accountant, sales person, or
business manager. (Japanese Management, 1982. pp 9). The Japanese also tend to look a non-Japanese as
an outsider. They will treated non Japanese differently until they are learned how Japanese culture works.
The Japanese often refer to their nation as our country (waga ku!
ni) and non Japanese as outside people (gaijin). (Lee and Schwendiman, 1982. pp. 7). In the Japanese
psyche is a concept of inside (uchi) and outside (soto) that not only defines ones membership, in a group
but determines how one speaks to and interact with others. (Iwata 1977, pp. 60-65).
The Japanese have a very unique culture. They are good at mixing other cultures with their own. As a result
of this blending, they come out with their own identity. China was the most importantly influenced.
Buddhist and Confucian philosophy are the basic framework the Japanese use to develop their way of
thinking. Buddhist was contributing the way of life. The Confucian taught the Japanese about traditional
value, external values, and harmony within the society, while at the same time emphasizing the collective
aspect of the social order. These systems are the most important thoughts of Japanese management system.
The Japanese used these influences to reject individualism. They prefer the natural order represented by
people living in human community, rather than by individual living in the state of nature.
Even though Japanese culture had a lot of influence by others, Japanese still use their own culture
to develop their management system. One of the Japanese traditional values is the samurai. Samurais are a
leader in a society. They have three codes: first, giri, social obligation, second, on, the concept of
benevolence and thus obligation to the lesser status, third, ninjo, a human felling- a kind of tolerance for
human nature. These three characteristics are known as the code of ethics in a professionals life. Beside
these three, samurai are also known for the loyalty to their landlord. Todays Japanese dedicate their life to
a corporation for their work. These system in their society are well known and apparently will be used as
long as this form of elitism justified itself through legitimate behavior.
Japanese firms used ringi-sei to make a decision regarding firm decisions. Ringi-sei is a document
circulated from the bottom levels of management to the top, and requires the signature of each manager at
each level involved before a decision can be implemented. The top managers only act as a facilitator to the
lower management, and if the decision is made then the upper management will look at whether it is proper
or not. These systems of decision making will allow everybody to participate in a organization.
The classical Asian assumption about seniority and age are the main influence in Japanese
management. The juniors management are always learned and they have to respect the senior management.
They must trusted the senior management just like the son to their father. In term, the Senior management
have a responsibility to give their knowledge and leaned younger guy. The upper managers have a big
responsibility for their subordinates. Therefore, the upper managers have a freedom in hiring them and
encouraged them to reach higher productivity. To have a successful career the junior management have to
learned everything . There is no fast track. Everybody will get promotion in time. Subordinates look up to
the seniors. This maintains the relationship very well.

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2.0.Management Japanese System
The beginning of this paper, Japanese used traditional values as a codes to manage their firm.
These system can be summarized books: Theory Z (ouchi), Organized of Management (Yamagata) and The
Art of Japanese Management (Pascale and Athos). From these three books we find that Japanese
management style emphasized the group rather than individual, emphasized on human rather than
functional relationship and a view of top as generalist and facilitators rather than as a decision makers.
Japanese society tends to live in groups. This kind of style also is reflected in corporation life. If
someone works in a corporation than he or she will felt sense of belonging. He or she will devote his or her
life to corporation. In this group, he or she will work as a unit to achieve corporation goals. Akiro Morita,
the president of Sony Corporation, once said his firm is a ship. Every person on this ship shares the same
fate. If one falters and causes the ship to sink, all will suffer (Morita, 1981). The President of Nippon,
describing the differences between America and Japanese management , said that, while a U.S. corporation
is regarded as a cold, impersonal economic unit, the Japanese unit is regarded as a community with a
common destiny (Japanese Managers 1977, p. 130).
The second important thing in Japanese management is emphasized on human rather than on
functional relationship. Japanese firms believe in how important human factor is for a corporation.
Therefore, they emphasize in individuals relationship. These are very important since a firm is viewed as
one big family. If there is a conflict in the firm, than it must be solved in a way so that one is humiliated.
The last important thing in Japanese management is a view of top managers as generalist and
facilitators rather than a decision makers. In a Japanese firm top managers are the ones that have already
worked a long time. They already know about the firm and have experience. The important job for the
managers is to become a facilitator and a generalist for subordinates to make a decision. A problem will be
solved in a group and tend to be a consensus. Perhaps the most widely discussed of Japanese management
is consensus or participate decision making. Such decision making modes have received considerable
attention by scholars. They conclude that a consensus approach, as compared with individual decision
making, often yields decisions that are more creative and that can be implemented more effectively (Ouchi
1981, p.43).
3.0.Practices and Process on Human Resource Management
Another important reason Japanese firms have been successful are, they have developed the
human resource very well. Japanese firms know that they have a limited resources except human resource.
Therefore, the only way to support these limited resources is they have to developed human resource.

The Japanese believe the basic policy for recruitment is to recruit from new school graduates and
the company expects these employees to work until a certain age. The company recruits not for a specific
job, but rather for a general job. Then, the new employees will developed their potential in a family
In Japanese firms, an employee is recruited by the company, not by the individual managers. This
makes the employee have a sense of security for their job. The managers will take a responsibility for their
job. The managers will find another job in another department even when their previous job is no longer
needed. Therefore, the firm is expecting a new employee to devote their lie to the success of the company.
In the past, the Japanese firms used to recruit a new employee from the middle school (age 15),
high school (age 18) and a four year college graduation (age 22). The middle school graduates usually work
in very small factories or shops because the medium and large company needs at least a high school
education. Male university graduates are expected to be future mangers. But today many companies are
trying to recruit from two year colleges, female university graduates, vocational school graduates, and
master and PhDs.
Japanese firms usually recruit a new employee directly from school. Therefore, the school has an
important role in the recruitment process. Schools are the bridge between employee and employer. School
and a firms had a good relationship. Both expect to have a long term relationship. The firms need the high
recruitment and the school reputation depends on the new employee. Schools usually provides information
about a company to a prospect employee a year before they graduate. They must already be prepared in the
final year.

The screening process in a firms uses: examination of school records, essay test, and interview. In
the school record, a Japanese firm usually is very particular, they need the best in a school. Some very large
companies may decide that only those who earned a grade of “A” in at least 20 subjects should be accepted
(Hideo Inohara. 1990). The age is also to be considered for the accepting employee. The employee must
have a certain age, and the age limit is 25 years old age as a new recruitment. After he has reached 25 years
old, it is considered time too long to graduate. Japanese firms do not put a lot of weight on testing. They
usually test general knowledge. The test includes an English test for the university graduates. The test is
basically to decide which department the new employee deserves.
The most important screening is the interviewed. The success of an interview is the one that the
decides whether they accept them or not. Many companies interview two times, but sometimes another
interview is conducted by large companies. First interview usually by the alumnus of school which work in
the company. Then if the alumnus is satisfied by their interview, the alumnus takes the applicant to a
personnel staff and the second interview is conducted. The large companies also conduct a group interview.
It means that the large companies gives a subject to be discussed in the group with others in the school
group. The companies will consider being hired by seeing which group reaches the decision, and works as a

3.2.Training and Development
In the training and development, the Japanese firms have four characteristics: first, emphasizing
human relation, second, being corporate responsible, third being continuous and versatile, forth, having
multiple purposes. (Hideo Inohara 1990, p.69)
Japanese firms know that their worker has a certain knowledge about technology or skill. To
develop this knowledge, firms believe the best way is learning by CO-worker. A firm does not have manual
guide books. Hiroshi Takeuchi wrote, In Japanese enterprises , manuals, if there are any manuals, are not so
detailed, and usually they are for non-clerical work. (The Management Challenge. 1985).
The firm has a responsibility to develop their employee. The training is treated as an asset of the firm. This
training is shared to CO worker to achieve the firms goal, it is not used to the benefit of the individuals. The
training is important, since the firm hires people on a long term contract.

To trine their employee, Japanese firms do not train in a specific subject. Instead, they gave
knowledge about different skills. The object of this kind a training is to take the employee to become
versatile, since the transfer between department can be occurring. This training makes the employee to
think as a group as individual.

The last characteristic of training and development is to focus on multiple purposes. The rapid
changes within a corporation must be maintained by being versatile. A top manager believes that the need
of corporation, worker relationship, and technology are changed rapidly and the only way to survive,
employees have to be able to adapt to these changes.

The form of Japanese firm used in training and development are: career development, training of
particular needs, and informal and self-development. (Hideo Inohara, 1990. pp 72)
In term of career development, a Japanese firm provides several training. They are try to make
every job easier. Employees are expected to be able to learn by themselves, and if they can not understand
about their job, then they can ask the CO-worker about it. Managers also are able to answer the employee.
In way the workers will be able to train to themselves while they are working. Job rotation is also a good
training. Employee will learn from a different perspective in terms of a companys need. These transfers
will bring a refresher to employees and they will be able to improve their skill. The future promotion is
deepening on this transfer, therefore they will not refuse it. In figure 1, we can see the effectiveness of job
rotation in Japanese firms.

Effect of Job rotation, 1982
It was effective: 65.8
A specific knowledge/skill was required25.6
Knowledge/skills were broad25. 4
Managerial ability was improved14.8
It was not effective: 25.8
Transferred by companys convenience 21.7
It was not at all effective for improving skill4.1
Figure 1
Note: The data are the number of respondents in percent of those who had experienced of job rotation.
Others includes “do not know”.

Source: MOL 1985f, p. 251.

Japanese firm usually train their workers outside the company for the specific need. The reason is
to learn about the style of management techniques, those including from the westerner. The other reason for
outside training is, that there an interaction between worker from different companies and perhaps in the
future between companies.
The last form in training and development is the informal training and self development.
Companies usually ask employees to develop their skill by themselves. This will give a benefit for the
employee. Sometimes, the companies ask the senior employee to teach younger age.

Promotion in the Japanese firms is slow but steady. Every new guy must seek the knowledge from
their ownselves and from CO-worker. The company also provides the training . The new guys must take
advantage from this system. They have to earned it to get promotion, there is no fast track. Many Japanese
firms used a how much merit an employee gives to a company in order to promote someone. The long
employee stays in the firm, the bigger chance they get promoted to a higher rank. Even though the
employee in time may get promoted, the merit from a company is the one to decide how higher they get a
promotion. This kind a system of promotion is very fit to Japanese firm because it similar with Japanese
culture. The job grading system is just introduced not long ago to Japanese culture.
The promotion is a very sensitive issue, therefore, the company always takes extra
attention !
because an extra promotion for a person in a group environment will bring unfairness. As a result, these
will not bring harmony to the company. The Japanese firms are always trying to maintain the harmony in a
The act for disciplinary measures is very uncommon to a Japanese firm. Japanese firms are always
trying to keep social harmony in the firm which is required for a new employee respect a senior and
superior, and have strict observations to a group norm. These rules are not hard for a majority of the
Japanese because they are match with their own culture.
There are two kinds of punishment. First is informal punishment. This punishment is to ignore a
person in a group. The CO-worker will not let this person work in a group. The company will not give
promotion to this person. The second kind of punishment is formal punishment. It means that the firm must
take action according to the Rules of Employment. The First stage is to give a written statement to a person.
Second, the firm usually asks for a written letter of apology. This letter has a very truthful meaning to a
Japanese. The third stage is to cut them financially in period times. The final stage is to ask for voluntary
retirement with retirement pension.
3.5.Quality Control
The Japanese learn quality control from America. The name of the founder is Dr. Edwards
Deming in 1950s. In the beginning the quality control was the only used the department of quality control.
In 1962, quality control was being used in all the department of a firm. The quality control function is
already being shifted from quality control to quality assurance. In recent years, the emphasis is going back
again to company viewed quality control or total quality control.

Japanese firms have used small group activity on a daily basis, approximately 60% of companies
have small groups are in operation (Hideo Inohara, 1990.p 148). Since there are a lot small groups then a
firm must used a secretary to control these. The secretariat will report a development of this group to higher

The Japanese firms are successful in developing quality control because the Japanese culture and
tradition are support it. For example Japanese society rejected individualism they tend to make a group.
There are several steps regarding the quality circle process. First is problem identification,
problem selection, problem analysis and resolution, and solution recommendation. Figure 2 is showed the
QC process. From this process, the firm allows all individuals to make a contribution for problem solving
in their small group. In this way, the individuals will have a sense of participation, contribution, belongings,
and they will feel confident about themselves.
When the small group made a decision, then the decision have to be pass to the upper
management, to be reviewed again. The final step is to get approved by the president of the company. This
system is allow the lower management and upper management have a communication through QC.

Quality Circle Process
Problem Identification
Problem Selection
members only
Problem Analysis&Resolution
members only
Solution Implementation Solution RecommendationManagement
Figure 2
3.6.Non-Regular Employee
In the Japanese firms the non regular employee is divided in to two categories: first temporary
employees, which are employed more than a month but less than a year. Second are day laborers, who are
employed daily, but not more that a months period of time.

Number of employee by period of employment 1965-87 (unit: 1,000)
Regular TemporaryDailyTotal
malefemalemalefemale male femalemalefemale
196517,9207,720 650 800670410 19,2408,930
197020,6909,370 6001,020620470 21,910 10,860
197523,3609,920 5801,160650510 24,590 11,590
198024,610 11,050 7201,800630600 25,960 13,450
198526,040 12,430 8302,340580650 27,450 15,420
198726,500 12,590 9202,500530600 27,590 16 ,050
Figure 3
Sources: statistic Bureau 1965, 1970, 1975, 1980, 1985, 1987a.

The non-regular are treated very differently compare to a regular employee. The salaries are low,
they do not have any retirement benefit. Because this kind of employee is knew and the impact for a firm is

The Japanese labor market is characteristic by the regular employee and non employees. They
have already been discussed in previous paragraph. The hiring for a non regular employees is limited by
The Labor Standards Law to be not more than a year. The regular employees are expected to stay in a firm
for long time, especially male graduates. The Japanese usually are concerned with males while females are
expected to work until they are married or pregnant. Even though today, Japanese firm already started to
employee female as future managers but in comparison to males, female employee still way to low. Figure
4, show the number of employment regarding to age. From this table we can see that the labor market in
Japan are very competitive.

Job Availability ( Job Opening/Job Applicants): Midcareer and New Graduates Employee, 1966-
Mid-career Employment +
19 years and younger 1.65.1 2.82.6 1.641.85
20-24 0.61.3 0.71.1 0.730.90
25-29 0.61.8 0.70.9 0.891.07
30-34 0.62.1 1.10.9 1.091.50
35-39 0.61.9 0.91.0 0.921.14
40-44 0.81.5 0.70.9 0.881.15
45-49 1.10.5 0.60.6 0.600.73
50-54 0.10.6 0.30.5 0.380.44
55-59 0.10.2 0.10.2 0.100.10
65-years and older0.10.2 0.00.1 0.150.22
Average0.61.6 0.70.8 0.670.80
New school graduates *
Middle school3.75.8
High school 0.67.1
Figure 4
+This includes part timers also, except for 1985. The survey was conducted separately
from that for new school graduates.

*No survey was conducted for four years college.

Source: MOL 1965a, 1070c, 1975d, 1980b, 1985I, 1987d.

4.0.Organizational Structure
The Japanese firms established themselves as not just for the economic but also to be social organization.
They usually have stressed about harmony within the company and with a social society. For inside
company, all workers treated as a family members to reach a harmony environment. The firm usually give
a contribution to benefit in a society.

4.1.Work Place
The perfect workplace for a Japanese worker is a place where lives their life. These viewed is from the
though of a corporation is a big family. The successful of a family is shared by all family members. The
condition of family members is being treated well. Hiroshi Takeuchi, wrote Japanese treats employee as if
they were family members. An employee who becomes crippled from an automobile accident after several
years of service with the firm will continue to be employed and will no be discharged even if his work
efficiency has fallen. If he dies than the company will take his wife and children will took care by the
company (The Management Challenge, 1985). The system will make employee to have sense of belonging
to a firm and the long term relationship will be expected.

4.2. Work System
A Japanese company have a three organizational principles: market orientation, continuos innovation, and
emphasis on relationship. A customer is believed to have an important role in successfully a firms. The firm
goals are to served society. Therefore a firm have to take an extra attention to customer. The Japanese also
always maintained a good image from a customer.
The second principle is to have a continuous innovation. The technologic and managerial are
always changed rapidly, therefore, they have followed this changes through continuously innovation.
The last principle is to emphasis relationship. The important role of managements role is to
develop human resource, beside to developed their skill. The managers believed that harmony is the key
element to achieve companys goal.
The workforce is looked as one unit. All employees are participant on decision process, not just
management can be make a decision. The management and employee have a very good relationship. The
different between these two only the time of staying and merit that manager have for company.
Corporate Objective
Group Stimuli
Flow of Work/
People Manager
(Hints and Suggestion)(Why?(why, whom))
We (employee)
Harmonics Society

Personal Motives
Flow Authority Manager
DoWhat to do
Do notHow to do
Threat and SectionStandard and Incentive
WorkerAction or no Action
Conflicting Society
Figure 5
Source: Human Resource Development in Japanese Companies by Hideo Inohara.

Japanese working method is to learned from the fellow worker since there is not manual guide. A
job description usually only for a general job. A company is expected a worker to develop their own skill or
ask a CO-worker. The system is very important since a firm always use a team work. A group working is
always sharing anything to solve a problem. The worker must have incentive what are benefits for the
group and for company. Figure 5 show the different between the Japanese management structure and the
western management structure.

4.3.Personnel Department
The Personnel Department have a function as the central agency in all personnel matters. Their function is
not just in the economic but also responsibility of the people who work in firm. These have two
implications; On the part of employee, a development is expected by the firm. On the firms part, the firm is
responsibility for the worker well being.
The Personnel Department have a job in term of general administration: documentation, research,
planning and budget. The Employment Regulation is the most important document and have or be
registered at the local Labor Standard Office. They have to collect data about of a workers do. They also
responsible for manpower used in a company. As the result for manpower that the Personnel Department
have to set up a budget for it.

In term of the employment relationship, the Personnel Department have to recruiting and job
assignment, training and separation, salary administration, working condition and welfare, and labor
relationship. The final decision for all activities is being take by the Personnel Department.

In summary, Japanese firm is using their culture in operating of a firms. Their basic management system
based on: (1) an emphasis on the group rather that the individual; (2) an emphasis on human rather than
functional relationship; (3) a viewed of top managers as generalist and facilitators rather than as a decision
marker. A firms always see an employee as a family members. They expected to higher an employee for
long term contract.